Category Archives: Bankruptcy

PHILADELPHIA (CBS) The sale of St. Christophers Hospital for Children in Philadelphia has been approved by the U.S. Bankruptcy Court. Drexel University and Tower Health have agreed to acquire St. Christophers Hospital for Children for a reported $50 million.

We are pleased the U.S. Bankruptcy Court has approved the sale of St. Christophers Hospital for Children to an entity formed by Tower Health and Drexel University. The Hospitals acquisition by such highly-regarded local institutions delivers financial stability, operational expertise, and long-term confidence. Hospital management and medical staff are eager to work with the buyer for a smooth transition and are committed to ensuring seamless patient care.

St. Christophers is an important health care provider, and our goal from the beginning has been to preserve uninterrupted access to world-class pediatric care and nationally recognized programs. Though it has been a long process, we have met that goal. We are satisfied this transaction ensures St. Christophers has a healthy future ahead of it.

The auction was prompted by the closing of Hahnemann University Hospital after its parent company filed for bankruptcy in June.

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Sale Of St. Christophers Hospital For Children Approved By US Bankruptcy Court - CBS Philly

Yesterday, the worlds oldest holiday firm, Thomas Cook UK (TCG), collapsed. The company is 178 years old. The companys stocks ceased trading on the London stock exchange immediately. The company, which avoided near bankruptcies several times, finally liquidated after it failed to secure a $250 million rescue funding required by its banks.

The firms survived near bankruptcy during the Second World War. In 1948, the British government nationalized Thomas Cook UK by making it a part of British Railways. In 1972, the firm was privatized. However, an ever-increasing debt burden finally took down the firm. The changing trend of booking holidays on the internet also contributed.

BBC News said that Thomas Cook UK ran hotels, resorts, and airlines in 16 countries. Also, the firm served 19 million customers annually. The companys collapse grounded 34 planes, including Airbus A321 and A330, from four airlines. It also shut down its travel agencies.

BBC News said that the collapse has put 22,000 jobs across the world at risk. And 9,000 of those jobs are in the United Kingdom itself. This sudden collapse led to the cancellation of bookings of more than 150,000 British holidaymakers. It has impacted 450,000 customers internally.

The Thomas Cook UK collapse benefitted rival travel agencies and airlines, especially budget airlines. Budget airlines are known for normalizing overcapacity in the sector. Stocks of travel agent TUI (TUI) and online holiday retailer On the Beach (OTB) rose more than 9.0% yesterday. Stocks of budget airlines EasyJet (ESJ) and Ryanair (RYA) rose as much as 6.6% and 2.8%, respectively.

However, the Thomas Cook UK collapse has put its banks and IT (information technology) partners under pressure. Thomas Cooks IT partner Amadeus (AMADY) stock fell 2.9% yesterday. Also, the collapse is drawing attention to French budget carrier XL Airways. According to Reuters, the company is seeking $38.6 million rescue funding from Air France.

Thomas Cook UK is insured by the government-run travel insurance program. This means the British CAA (Civil Aviation Authority) will bring home over 150,000 Thomas Cook British holidaymakers.

The CAA has announced Operation Matterhorn. This is the biggest peacetime repatriation operation since World War II. Under this plan, the CAA chartered 45 jets from various airlines, including EasyJet and Virgin, on Monday. These jets flew 64 routes and brought home more than 14,700 passengers.

It aims to repatriate all affected passengers in the next 13 days by chartering more jets. The CAA plans to bring home as many Britons as they can on their booked return date. However, a small percentage of customers will still be affected.

According to The Guardian, some critics argue that the cost of bringing customers home exceeds the $250 million bailout Thomas Cook UK needed to survive. According to BBC, shadow chancellor John McDonnell said the government should have bailed out Thomas Cook if only to stabilize the situation while a real plan for the future of the company could be addressed.

The Indian newspaper The Economic Times posted British Prime Minister Boris Johnsons reply. He said the company directors were not motivated to sort such matters out. Hence, the British government did not bail out Thomas Cook to prevent a moral hazard.

Although Thomas Cook UK ceased trading, its Indian, Chinese, German, and Nordic subsidiaries will continue normal trading. These subsidiaries are separate legal entities from Thomas Cook UK and do not fall under the jurisdiction of the UKs Official Receiver.

Indian newspaper The Hindu Business Line noted that Canadas Fairfax (FRFHF) bought a 77% stake in Thomas Cook India in August 2012. Under the deal, Thomas Cook UK will no longer to be the promoter of Thomas Cook India. TCG no longer had a stake in the subsidiary. Thomas Cook India is debt-free on a stand-alone basis. It earns average annual FCF (free cash flow) of ~$35 million. Also, Thomas Cook India has a cash reserve of $195 million.

However, Thomas Cook UK subsidiaries share services like aircraft and IT with Thomas Cook UK. If these subsidiaries want to continue trading, they need to strike rescue deals. If they fail to do so, the parent company collapse will affect up to 450,000 international customers.

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Thomas Cook UK Fails to Avoid Bankruptcy - Market Realist

Federal lawmakers on Thursday proposed a bill that would require companies to file for chapter 11 bankruptcy in a courtroom close to their principal place of business, rather than where they are incorporated.

The bipartisan bill, called the Bankruptcy Venue Reform Act of 2019, hopes to spread bankruptcy cases throughout the US to ensure that employees, small businesses and local employees are able to fully and fairly participate in the proceedings.

Current federal law allows companies to file for bankruptcy protection either where they are incorporated or where they operate much smaller affiliates. Most often, bankruptcy cases have been decided in either Delaware or New York. Supporters of the existing law argue that the experienced judges in popular venues like Delaware can better handle complicated issues.

Delaware Governor John Carney reiterated that companies from around the country choose to incorporate in Delaware specifically because of the expertise and experience of Delawares judges, attorneys and business leaders.

Experienced bankruptcy courts and judges are critical to ensuring that restructurings preserve the underlying businesses and save jobs. Altering the venue laws that have been in place for decades and replacing them with restrictions undermines well-settled principles of corporate law, threatens jobs, and hurts our economy.

Representatives Zoe Lofgren (D-CA) and Jim Sensenbrenner (R-WI) introduced the bill.

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Federal lawmakers propose new bankruptcy venue laws - JURIST

Shares of ailing oil-and-gas engineering and construction company McDermott International (MDR) fell off a cliff last week after media reports of the company having retained turnaround consulting firm AlixPartners LLP "to advise on efforts to improve cash flow and stem a recent spate of net losses" emerged.

Last year's ill-advised acquisition of Chicago Bridge & Iron ("CBI") is now threatening to take down the combined company after massive losses in legacy CBI projects continue to mount.

Photo: Cameron LNG Facility Construction Site at Hackberry, Louisiana - Source: Mitsui & Co.

Two months ago, McDermott reported an abysmal Q2/2019 and significantly reduced guidance for the remainder of the year. Management's projection for cash outflows to more than double from previous expectations to $640 million for FY2019 was perhaps the most troubling disclosure at that time.

In addition, the company continues to struggle to sell its industrial storage tank business and the remaining part of its pipe fabrication business with a transaction for the storage tank unit now expected in Q4/2019. Aggregate cash proceeds are now expected to be lower than the $1 billion previously estimated by management.

That said, on the conference call, management expressed its satisfaction with the company's cash on hand and available credit facilities of $1 billion in total and insisted on the company's liquidity profile being "adequate" a number of times.

The big question is: If the company's liquidity profile remains adequate and additional cash soon being provided by the imminent sale of the storage tank business, what is the recent fuss all about?

At least when judging by my long lasting experience in corporate debt restructurings, particularly in the energy space, the combination of the above discussed issues almost certainly results in the company filing for bankruptcy at some point going forward.

While not impeccable, bond prices often act as a harbinger for things to come particularly in case of ongoing restructuring negotiations. While bondholders directly involved with the company are usually restricted from trading in the company's securities, this, in many cases, does not prevent information from leaking into the markets.

Moreover, the company's $69 million semi-annual bond interest payment will be due on November 1 and judging by the price action in the bonds, the company might actually consider omitting the payment.

That said, McDermott's bonds have also been on a wild ride recently. After having traded at around 70% of face value for the past couple of weeks, the news of potential debt restructuring caused the bonds to trade down to below 20% on Thursday only to temporarily double on Friday following the company's disclosure to have retained investment bank Evercore to explore strategic alternatives after it "recently received unsolicited approaches to acquire all or part of Lummus Technology, McDermott's industry-leading technology business, with valuation exceeding $2.5 billion" only to fall back into the mid-20% area as of the time of this writing.

Clearly, the majority of bond investors does neither expect the company to remain within its current capital structure nor to be made whole in a potential debt restructuring at this point and I very much agree with them.

Given last week's events, I do not expect the company to close the proposed sale of the storage tank business for the foreseeable future not to speak of the remainder of its pipe fabrication business.

Regarding Lummus Technology, it is very hard to imagine that McDermott could really succeed selling the business in due time at the stated valuation as buyers are used to picking up assets of distressed companies at bargain prices.

While at least one sell-side analyst thinks the hail mary attempt to save the company from bankruptcy could work, I remain doubtful. Moreover, the company's senior secured term loan lenders might object to the proposed sale if they consider a restructured McDermott to be better off long-term by keeping the unit.

While there's undoubtedly a lot of going on behind the scenes at McDermott right now, this doesn't mean that key information hasn't already leaked.

Given the upcoming bond interest payment, a debt restructuring agreement and a subsequent bankruptcy filing could become reality much sooner than many market participants might think at this point.

But there's another issue investors need to consider:

Last week's events didn't exactly help the company to win new business and I fully expect McDermott to be met with increased scrutiny by potential customers and contractors going forward which could cause the downward spiral to accelerate even further.

The company urgently needs to work through the legacy issues mostly inherited from CBI while at the same time stabilizing the balance sheet and potentially shore up liquidity to show its ability to execute on both existing as well as potential future contract awards.

My personal expectation is for the company to enter a restructuring agreement with creditors rather sooner than later with bondholders getting the lion's share of the new equity and current equityholders only receiving a very minor stake in the restructured company.

Given the very real possibility for the common equity to be wiped out entirely, investors should remain on the sidelines.

Expect the shares to remain highly volatile and mostly serve as a playground for momentum traders and speculative retail investors for the time being.

While I have traded the shares on both the short and long side over the past couple of sessions, I do not own a position in McDermott at the time of this writing.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: While I don't own a position in MDR at the time of this writing, as a daytrader I might decide to enter into a short or long position in McDermott's stock at any time.

Link:

McDermott - Struggling To Avoid Bankruptcy - Seeking Alpha

As Purdue Pharma undertakes the laborious bankruptcy process, plaintiffs in thousands of opioid suits are looking to lock in settlement funds from the stripped-down drugmaker. Purduefor its partis hoping to secure incentives for its employees in the meantime.

Purdue has asked permission to pay out more than $34 million in annual and long-term incentives to its employees as the company undergoes a court-supervised restructuring, according to a Chapter 11 motion filed Monday in the Southern District of New York.

As part of its request, Purdue hopes to pay $26.5 million by March 2020 for its annual incentive plan, which awards employees based on personal performance and the financial performance of the company, Purdue attorneys wrote. The drugmaker is also seeking $7.9 million in its long-term cash incentive program, which covers three years of employee performance.

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Attorneys for Purdue argued the two programs were critical as an employee motivation tool but said the plan would not be used to pay company insiders prior to a signed settlement.

In an emailed statement, Purdue said the incentive funds were important tools to retain employees and are standard across pharma. However, the drugmaker didnt specify which of its 700 employees were eligible for the incentives or whether the incentives were appropriate given the companys bankruptcy filing.

Retaining our talented and dedicated employees is a key determinant of the companys future value, the company said. These bonus payments at the company are awarded through long standing annual benefit plans, are reasonable in amountand similar programs are commonplace at most companies.

RELATED: State attorneys general promise bankruptcy court showdown as Purdue inks $10B opioid settlement

While the incentive plans may be standard for the industry, Purdues current financial state is not. The company is wrappinga record-setting settlement with 24 states and thousands of local plaintiffs over its marketing of powerful opioid OxyContin.

Monday, Purdue agreed to offer upat least $10 billion to help fight the opioid crisis that the drugmaker itself allegedly helped create. As part of the deal, the company filed for bankruptcyand intends to restructure as a public benefit trust to provide the free drugs and financial contributions that make up the majority of the settlement.

Under the arrangement, the companys billionaire founding family, the Sacklers, will chip in at least $3 billion, and Purdue will provide overdose reversal medicines plus proceeds from ongoing sales.

RELATED: Who joins Purdue on pharma's top 10 settlements list? Merck, GSK and Pfizer, for starters

Purdues settlement would make it the first drugmaker to strike a deal in a multidistrict litigation in Cleveland that has roped in around 2,000 cities, towns and villages. Three other drugmakersEndo, Allergan and Mallinckrodthave separately settled with two Ohio counties but have yet to reach massive deals of their own.

The Purdue deal would immediately rank as the single largest settlement ever struck by a drugmaker, but more could be on the way as the Cleveland litigation proceeds. Despite 24 states signing on to the agreement, other state attorneys general have pledged to fight Purdues bankruptcy in the hopes of derailing the deal.

So far, those bankruptcy filings have not only shed light on Purdues corporate structure but also the firms attempts to spin the narrative as opioid lawsuits have piled up.

According to The Intercept, Purdue retained controversial PR firms Purple Strategies and Dezenhall Resourcesthe corporate spin doctors who worked with BP after the disastrous 2010 Deepwater Horizon oil spill. Purdue said in a filing it owed the two firms $300,000 for services rendered.

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Purdue seeks $34M in employee bonuses as bankruptcy process begins - FiercePharma

Less than five years after its inception, the Charlotte-born beer delivery service BrewPublik has filed for bankruptcy. The localstartup darling expanded in recent years, evolving from its signature home-delivery to supplying craft beer to the headquarters of major Silicon Valley companies, including LinkedIn, Google and WeWork.

In an interview with the Agenda, co-founder and CEO Charlie Mulligan said that the decision to file Chapter 7 bankruptcy last week was not prompted by any major event or drop in sales. Revenue has grown consistently by roughly 80 percent every year, Mulligan says. Overall sales totaled over $2 million last year, he says.

Still, the company wasnt growing as quickly as Mulligan and his team had hoped. BrewPubliks debts mounted, and its employees simply wanted to move on to something different.

Generally things were proceeding in a positive manner, says Mulligan, 30. This was just a decision having to do with what everybody in the company kind of wants to do with their lives.

Former employees, however, contend Mulligans optimistic spin on the situation.

Brandon Reed, who oversaw BrewPubliks East Coast operations, says employees were not consulted about Mulligans decision to file for bankruptcy.

Mulligan oversaw the companys finances, but Reed and others knew that BrewPublik owed a lot of people a lot of money. Among the creditors listed in BrewPubliks bankruptcy filing are breweries and distributors in California, an artist in Charlotte, financial consultants in New York and the Internal Revenue Service.

The way he worded it to me (was) hes like the guy in the movies walking out of a burning building, Reed says.

All those people he owes money to? Theyre not walking away. Theyre still in the building.

When he and a few friends started BrewPublik, Mulligan used an algorithm (called a beergorithm) to curate a selection of craft beers for customers once a month.

The highs and lows of starting a company from scratch never change, Mulliganwrote in a column that appeared in the Agenda inAugust 2015.

Sometimes, I feel like Im on the precipice of the most exhilarating life ever. At other times, I look around and legitimately worry that Im going to end up penniless and destitute.

In 2016, venture capital firm SierraMaya360 said it would invest $5 million over five years to to help accelerate BrewPubliks growth. SierraMaya360 founding partner Amish Shah introduced Mulligan to 500 Startups, an accelerator based in San Francisco. BrewPublik became the first Charlotte company accepted into the program.

Within a few months, the tide started to shift for BrewPublik, which hadits headquarters at the AvidXchange Music Factory.

An early 2017 article in the Charlotte Business Journal called into question how robust SierraMaya360s investment in BrewPubliks business really was. The article (headlined What happened after this venture capital firms big splash in Charlotte? Not much) stated that to date, BrewPublik had only received $15,000 from SierraMaya360.

Jeff Brokaw, a former associate at SierraMaya360, said that was the extent of the firms investment in BrewPublik. Brokaw left SierraMaya360 in December 2016.

Nothing additional was ever put (in) it, Brokaw told the Agenda.

SierraMaya360 could not be reached for comment. Mulligan told the Agenda that BrewPublik had not secured additional venture capital funding since SierraMaya360s 2016 announcement.

In late 2017, BrewPublik said it would discontinue its home-delivery service in order to right size the company, the Charlotte Observer reported at the time.

Indian Trail resident Candy Lake says she was one of BrewPubliks early customers. She enjoyed the surprise of the curated beer selection delivered to her doorstep, as well as to her tailgates before Panthers home games.

Lake says she was very disappointed when BrewPublik discontinued home delivery in favor of corporations.

I think thats where they went wrong alienating their first core customers, Lake said in an email.

When BrewPublik discontinued home delivery, Mulligan told the Observer that the company had extremely ambitious expansion plans in 2018, including anexpansion into at least seven total markets.

By the time it declared bankruptcy, BrewPublik had expanded its beer-delivery service to five markets: San Fransisco, Seattle, Charleston, Charlotte and Raleigh.

Were very young company, and ultimately it became less attractive to continue, Mulligan says.

Startups have something like a 90 percent failure rate, Fortune, Forbes and others have reported.

The forces against them are strong, Mulligan says. Startups grow a business out of nothing, often in undeveloped industries. They feel compelled to expand in a short period of time in order to meet investors ambitious goals.

I dont think theres anything wrong with that. I just think if youre not getting the traction that you want to, eventually it does really wear on everybody, Mulligan says.

Its now also getting easier to get alcohol delivered to your doorstep through companies like Doordash and Uber Eats. Mulligan says competition wasnt really hurting BrewPublik, though.

The majority of those grocery-store-based delivery systems dont work that well with the curated type experiences that BrewPublik was providing to customers, Mulligan says.

A small business files for Chapter 7 bankruptcy when it is unable to repay its creditors.

Unlike in a Chapter 11 bankruptcy, a business has to discontinue operating if it files Chapter 7. Mulligan says BrewPublik worked to take care of its outstanding commitments before filing last week. Mulligans attorney, Travis Sasser, declined to comment.

A bankruptcy filing is just to try to make sure that anybody who has a claim gets fairly treated and that everything gets distributed properly, Mulligan says. He could not be reached for further comment about the companys debts.

After BrewPublik shut down, Reed, the former BrewPublik employee, quickly started his own company, Vibe Carolina, which also delivers curated craft beer selections. Hes focused just on North Carolina for now, and works with some of the customers who used to use BrewPublik.

I didnt want to do anything different; I loved my job. Thats why I opened up my own company, Reed says.

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Behind the sudden bankruptcy of Brewpublik, the Charlotte startup that delivered beer to Google and WeWork headquarters - Charlotte Agenda

Tuesday, September 24, 2019 9:15 a.m. CDT

BENGALURU (Reuters) - Indian telecom company Reliance Communications Ltd's (RCom) Chief Executive Officer Bill Barney will step down but remain as head of its U.S. unit, Global Cloud Xchange (GCX), as it goes through bankruptcy proceedings, GCX said on Tuesday.

GCX, an under-sea cable supplier, expects to complete the liquidation process by the end of the fourth quarter.

"With GCX's recent voluntary Chapter 11 filing, it will be in the best interest of both RCOM and GCX for me to step down at this time to focus on GCX restructuring," Barney said in a filing.

Anil Ambani-led RCom filed for bankruptcy in India earlier this year as lack of regulatory approval for asset sales hampered the company's efforts to solve its debt crisis.

(Reporting by Chandini Monnappa in Bengaluru; Editing by Sriraj Kalluvila)

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India's RCom CEO steps down to focus on U.S. unit's bankruptcy process - KFGO News

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Mercy College flags heralding "A New Path" have replaced College of New Rochelle flags on CNR's former campus in New Rochelle, Sept. 2, 2019.(Photo: Mark Lungariello/The Journal News)

The College of New Rochelle has filed for bankruptcy and will sell its 15.6-acre former main campus in an auction within two months.

The Chapter 11 bankruptcy filing Friday comes a month after the college ceased academics and held the final graduation in its 115-year history.

A deadline for qualifying bids to take part in the auction will be due some time in early November, with specifics yet to be announced. The campus is being leased through 2020 by Mercy College, which reportedly accepted the transfer of more than 1,700 former College of New Rochelle students.

The bankruptcy is the final chapter of this storied college, Mark Podgainy, the schools interim chief restructuring officer said in a statement.

FUTURE: College trustees 'hopeful' educational use continues after campus is sold

TIMELINE: A look at the collapse of the College of New Rochelle

SENTENCING: Former controller gets 3 years, must pay restitution

CAMPUS: An in-depth look at its future (subscribers only)

Over the course of the last 115 years, CNR has provided more than 87,000 students women and men, both traditional age and adult learners with the opportunity to better their lives through education, he said.

The college decided to dissolve after a long-standing financial crisis that led to the conviction of a high-ranking finance official on federal charges. The area is zoned for educational or single-family residential; other uses would need to be approved through a zoning change by the New Rochelle City Council.

A&G Realty Partners and B6 Real Estate Advisors are marketing the campus for either continued use as an educational facility or redevelopment for other uses including residential. The campus has 20 buildings, with more than 425,000 square feet of space.

There has been tremendous interest in the campus since the announcement CNR was closing, Emilio Amendola, co-founder and co-president of A&G, said in a statement. A turnkey campus such as this, located 15 miles from Manhattan, is a once-in-a-generation opportunity for an educational user. The orderly bankruptcy sale will maximize recovery for all parties involved.

Final bidding procedures and deadlines will be announced once approved by the bankruptcy court, the companies announced.

The college was already facing declining enrollment and difficulty keeping its head above water in October 2016, when it announced the resignation of then-President Judith Huntington alongside the launching of an internal financial probe.

The probe uncovered $31 million in previously unknown debts, including millions in mounting payroll taxes, that had been hidden from the college's financial books and its board of trustees.

Despite recovery efforts that included the sale of some properties and a fundraising initiative, it became clear that digging out of that hole was becoming more and more unlikely.

The college announced earlier this year it would close, with administrators shifting the focus on securing a "teach-out" agreement to offer a path for its 2,700 students to complete their educations elsewhere.

Former Controller Keith Borge, who retired before the announcement of the financial crisis, pleaded guilty in March to charges of securities fraud and failure to pay payroll taxes. He was sentenced on Aug. 28 to three years in federal prison and must pay a $25,000 fine.

In its bankruptcy court filings, the college still listed $17.9 million in tax debts to the IRS and New York State, as well as $100,000 to the city of New Rochelle. It also owes $30 million to the Dormitory Authority of the State of New York and $13 million to the New Rochelle Industrial Development Agency, which issued bonds for construction projects on campus.

The college listed outstanding loans to Key Bank and The Carney Family Charitable Foundation of $2.4 million and $2 million, respectively. In total, there were $72 million in assets listed as of Aug. 28 but liabilities exceeding $82 million.

The bankruptcy filing listed between 1,000 and 5,000 possible creditors. Some of the largest included landlords for spaces in New York City, totaling more than $900,000 to four different companies. Some $3 million was listed as owed to the Industry and Local 338 Pension and Welfare.

The college has as many as 32 people still on staff during the wind-down process, the filing showed. The interim restructuring officer asked the court to allow for authorization for some spending, including $150,000 to Marist College, which operates the closing schools computer system.

Follow Mark Lungariello on Facebook: @lungariello; and Twitter: @marklungariello.

Read or Share this story: https://www.lohud.com/story/news/education/2019/09/20/college-of-new-rochelle-bankruptcy-closing-campus-sold-auction/2376019001/

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College of New Rochelle files for bankruptcy, campus to be sold at auction - The Journal News / Lohud.com

Members of the United Auto Workers (UAW) who are employed at the General Motors Co. Flint Assembly plant in Flint, Michigan, picket outside of the plant as they strike on September 16, 2019. - The United Auto Workers union began a nationwide strike

A decade ago, the United Auto Workers were forced to negotiate a new labor contract that more or less accomplished what Senator Bob Corker (R-Tenn.) demanded as a concession for his support of a government bailout. Without reversing the practices forced upon automakers in contract negotiations since the 1980s, Corker understood that a bailout would be meaningless, leaving the Detroit 3 vulnerable to the next recession or economic crisis. The UAW fared better under the 363 bankruptcy than it would in Chapter 7 or 11, but it had to acquiesce to demands that restored labor to a variable cost and removed the gold-plated health care obligations that retirees enjoyed off the balance sheet. Work rules and job classifications were streamlined at the factory level, and the onerous and ridiculous Jobs Bank paid laid-off workers more than 90 percent of their normal wages while doing nothing.

I have always held these companys managements responsible for putting short-term objectives ahead of facing down the Union and its ever-greater demands that brought the domestic automakers to this crisis. The tool the Union used is the same as we see today select a target and threaten to strike while allowing domestic rivals to capture market share during the shut-down period. Detroits myopia was so ingrained that it failed to understand the financial consequences of what the target company agreed to. The target auto company executives often misguidedly saw it as an opportunity to negotiate favorable terms for itself while punishing domestic rivals. That shortsighted behavior usually included the assumption that in due course the transplant factories in the south would be unionized, which, of course, has not happened, nor will it. Todays strike only reinforces to the transplant workers that they are protected by working for financially strong companies and not by a contract.

At the end of one negotiation, I sipped wine past midnight in Hyatt Regency Dearborns bar while commiserating with Don Ephlin, then the head of the GM branch of the UAW. The negotiations were done, and Don, his assistant and I talked about the impact of the contract terms GM agreed to. Don understood more than other UAW leaders that the Union was doing itself and its members long-term harm. He asked me how I thought Roger Smith, the CEO of GM at the time, would present the contract to investors the next day, and I replied, Like he has in the past. Hell say that the additional cost will be spread over the volume as GM gains share, and hell skirt the issue that national and local contracts aimed at creating jobs will add fixed costs to already-struggling companies. Don probably understood the threat that the U.S. auto industry was under better than some of the executives in the auto companies. He participated with me and representatives of all major international auto companies in MITs decade-long study of manufacturing practices, which revealed Japans competitive advantage. Don understood that the only way the UAW would grow was by representing workers in financially strong companies, something UAW leadership in the 1990s and 2000s (until the bankruptcy) never learned.

The current contract talks are trying to claw back what was given up in the 2009 bankruptcy negotiations. Now that GM is financially sound, the Union wants to protect jobs by converting temporary workers into permanent ones. They want cost of living raises, forgetting that GM paid the average worker a $14,000 profit sharing bonus last year. The Union wants the Lordstown, Ohio plant reopened; a path to give temporary workers full-time status; and wants to eliminate two-tier compensation for new hires, no doubt raising all salaries to the wages and benefits of legacy workers. No doubt, when local contracts are negotiated, there will be demands for more Union representatives in the factories paid by the companies and restored work rules that reduce productivity and increase costs. All the while, the UAW sees more members. The once 700,000-member Union now has fewer than half that number.

I give Mary Barra high marks for announcing the closure of eight plants, including three assembly plants last November, since the company was able to take logical restructuring actions without the impediment of potential job protection claw backs in a new contract. GM made the final (hopefully) move to right size its assembly footprint and production cost structure.

GMs current leadership has been responding to the unprecedented uncertainties surrounding the future of the auto industry. While I highly doubt that we will see autonomous electric vehicles in fleets or my garage for many years, competition in the global auto industry has never been more intense. The Chinese auto industry is ascending, having learned much from the technology transferred by foreign automakers partnered with major Chinese players. Global supply chains are under threat, and costs associated with tech-heavy vehicles have raised the price to consumers, pushing new cars outside their budgets. Mergers and collaboration among automakers has never been more intense and is also reshaping competition. The UAW should understand that if it returns to its past practices, it will put the Detroit 3 on the path toward lower profitability and risk becoming unable to field a competitive product portfolio. Chrysler continues to search for a partner, and Ford bonds are now rated Ba1 (junk) after five of the best years the industry has seen in a long time.

Lest I be seen as anti-union in my comments, my father was a Union member his entire working life and a Union leader in his factory, and my sister was a unionized teacher for more than 30 years, I understand the importance of representation that levels the playing field between the institution and the individual. But I also understand that it's the Union, akin to fate, which plays a key role for each job, factory and as a whole. Putting short-term objectives at the forefront without understanding the environment in which institutions operate got us where we are today.

Originally posted here:

The UAW Didnt Learn From General Motors Bankruptcy - Forbes

Hundreds of travelers have been stranded at the Cancn airport after the collapse of the British travel agency Thomas Cook.

No other country in Europe sends more tourists to Mexicos Caribbean coast than the United Kingdom, and it is only surpassed worldwide by the United States and Canada, according to figures from the Secretariat of Tourism.

And Thomas Cook sent the majority of those tourists, said Daro Flota, director of Quintana Roos tourism promotion board.

The impact is going to be very powerful, and it will take some time to recover, he said in an interview on Radio Frmula.

In addition to stranded travelers, Flota said the bankruptcy will also leave large amounts of debt in the area and cost many tourism sector jobs.

Cancns airport was crowded with over 300 desperate tourists trying to make their way home after the companys airline canceled its two scheduled flights for Monday, one to London and the other to Manchester.

The British Embassy in Mexico City sent staff to Cancn to help rebook travelers on a different flight to Manchester, but even they werent happy with the situation.

We were supposed to fly to London, but now were going to Manchester, so Im going to miss my connecting flight to Ireland, a redirected traveler named Jordan told the news agency AFP.

Thats what they told us in the hotel, but I have no idea. At least I didnt have to pay anything.

Another traveler named Matt said he couldnt believe what was happening.

We need to get home. Its a big travel company. Theyre everywhere, he said, though he still could see the bright side.

But at least we had a holiday. Some people wont.

Among the desperate, stranded travelers were families with tired children, students worried about missing classes and employees concerned with getting back to work.

In 2018, the U.K. sent 590,000 tourists to Mexico, and 77% of those visited Cancn, according to the Secretariat of Tourism.

Sources: Yahoo! News (en), Animal Poltico (sp)

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Thomas Cook bankruptcy strands travelers in Mexico - Mexico News Daily